Western Union Reports Second Quarter Results

ENGLEWOOD, Colo., Jul 30, 2013 (BUSINESS WIRE) --
The Western Union Company
WU, +6.41%
today reported financial results
for the 2013 second quarter. The Company also affirmed its full year
financial outlook provided on April 30, 2013.

"The strategy we laid out at the beginning of the year is working," said President
and Chief Executive Officer Hikmet Ersek. "We have confidence in the
strength of our business model, and I am pleased with the second quarter
results. Business trends improved, and we continued to make good
progress toward our 2013 strategies to strengthen consumer money
transfer, increase customers and usage in business-to-business, and
generate and deploy strong cash flow for our shareholders."

Ersek added, "Consumer money transfer transaction growth rates
accelerated, with the Western Union brand increasing 7%, driven by
strategic pricing investments and strong performance in electronic
channels. Business Solutions delivered another quarter of steady growth,
and year-to-date we have returned over $450 million to shareholders
through dividends and share repurchases. We affirmed our financial
outlook for the full year, and believe we are on target to return to
revenue and profit growth in 2014."

As expected, second quarter revenues declined 3% compared to the prior
year, or 2% on a constant currency basis, primarily due to pricing
investments in the Consumer-to-Consumer (C2C) segment. C2C revenues
declined 4%, or 3% constant currency, including a negative 1% impact
from the Vigo and Orlandi Valuta brands.

C2C pricing investments in key corridors are meeting the Company's
transaction objectives and contributing to the second quarter
acceleration in transaction growth compared to the first quarter.
Western Union branded C2C transactions increased 7% in the second
quarter, compared to a 2% increase in the first quarter. Total C2C
transactions increased 3% in the second quarter, compared to a 2%
decline in the first quarter. Total transaction growth continued to be
negatively impacted by compliance related changes, including actions
implemented in the third quarter of 2012 which affected the Vigo and
Orlandi Valuta brands.

GAAP operating margin was 20.0%, which compares to 24.3% in the second
quarter of 2012. Earnings per share of $0.36 compares to $0.44 in the
prior year period. As previously disclosed, the Company expects 2013 to
be a transitional year as it implements key strategic actions, with a
return to profit and revenue growth expected in 2014.

Progress on 2013 Key Strategies

Strengthen consumer money transfer The pricing investments
intended to regain customer momentum are driving increased transaction
volumes and usage. C2C transactions increased 17% in the second quarter
in the corridors in which pricing investments had been implemented prior
to the beginning of the quarter. Excluding digital, C2C transactions in
these priced corridors increased 11%. By the end of the quarter
substantially all of the planned pricing investments for the year had
been implemented.

Pricing investments in Mexico are delivering strong results. Western
Union branded transactions in Mexico increased 22% in the second
quarter, which compares to 9% growth in the first quarter.

Electronic channels continued to expand, with revenue growth of 26% in
the quarter. Westernunion.com online money transfer transactions
increased 68%, and transactions from account based money transfer
through banks increased 51%.

The Company continues to add new channel options for consumers,
including direct-to-bank transfer services to India, which were
initiated in July. These services are available from the U.S. and the
U.K. through both westernunion.com and participating agent locations.
Western Union money transfer services are also now available at
approximately 115,000 ATMs around the world.

Increase customers and usage in business-to-business Western
Union Business Solutions delivered a second consecutive quarter of solid
growth, as revenue increased 8% constant currency compared to the prior
year quarter. Strategic progress in the quarter included the launch of
an international payments service for small and medium sized businesses
that utilize the online MasterCard Business Network, expansion of
payments services in India and Japan, and the initiation of
business-to-business offerings in a 32nd country, Colombia.

Generate and deploy strong cash flow for shareholders Year-to-date
cash flow from operating activities totaled $478 million. The Company
returned $194 million to shareholders in the quarter, consisting of $125
million of share repurchases and $69 million of dividends, and has
returned $454 million year-to-date through June. In July, the Western
Union board of directors declared a quarterly cash dividend of $0.125
per common share, payable September 30, 2013 to stockholders of record
at the close of business on September 16, 2013. Full year share
repurchases and dividends are expected to total approximately $700
million, which represents approximately 7% of current market
capitalization.

2013 Full Year Outlook

The Company affirms its full year outlook for 2013 provided on April 30,
2013:

Revenue and C2C Transactions

--
Low single digit constant currency revenue declines

--
Consumer money transfer pricing investments of approximately $300
million, or 5% of total Company revenue, are reflected in the outlook

--
Mid to high single digit Western Union brand C2C transaction increases

--
Overall C2C transaction growth approximately 2 percentage points lower
than the Western Union brand due to declines from Vigo and Orlandi
Valuta resulting from compliance related actions

Operating Margins

--
GAAP operating margin of approximately 20%

--
EBITDA margin of approximately 24.5%

Tax Rate

--
Effective tax rate of approximately 15%

Earnings per Share

--
GAAP EPS in a range of $1.33 to $1.43

Cash Flow

--
Cash flow from operating activities of approximately $900 million, or
approximately $1 billion excluding anticipated final tax payments
relating to the agreement announced with the U.S. Internal Revenue
Service in December 2011. Approximately $100 million of tax payments
related to the agreement are included in the 2013 cash flow outlook,
although it is possible some of the payments may not occur until 2014.

Additional Statistics

Additional key statistics for the quarter and historical trends can be
found in the supplemental tables included with this press release.

Reconciliations of non-GAAP to comparable GAAP measures are available in
the accompanying schedules and in the "Investor Relations" section of
the Company's website at http://ir.westernunion.com.

EBITDA

Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)
results from taking operating income and adjusting for depreciation and
amortization expenses. EBITDA results provide an additional performance
measurement calculation which helps neutralize the operating income
effect of assets acquired in prior periods.

Currency

Constant currency results assume foreign revenues and expenses are
translated from foreign currencies to the U.S. dollar, net of the effect
of foreign currency hedges, at rates consistent with those in the prior
year. Constant currency results also assume any benefit or loss caused
by foreign exchange fluctuations between foreign currencies and the U.S.
dollar, net of the effect of foreign currency hedges, would have been
consistent with the prior year. Additionally, the measurement assumes
the impact of fluctuations in foreign currency derivatives not
designated as hedges and the portion of fair value that is excluded from
the measure of effectiveness for those contracts designated as hedges is
consistent with the prior year.

Investor and Analyst Conference Call and Slide
Presentation

The Company will host a conference call and webcast, including slides,
at 8:30 a.m. Eastern Time today. To listen to the conference call via
telephone, dial 1 (888) 317-6003 (U.S.) or +1 (412) 317-6061 (outside
the U.S.) ten minutes prior to the start of the call. The pass code is
5643880.

The conference call and accompanying slides will be available via
webcast at http://ir.westernunion.com.
Registration for the event is required, so please register at least five
minutes prior to the scheduled start time.

A replay of the call will be available approximately one hour after the
call ends through August 13, 2013, at 1 (877) 344-7529 (U.S.) or +1
(412) 317-0088 (outside the U.S.). The pass code is 5643880. A webcast
replay will be available at http://ir.westernunion.com.

Please note: All statements made by Western Union officers on this call
are the property of Western Union and subject to copyright protection.
Other than the replay, Western Union has not authorized, and disclaims
responsibility for, any recording, replay or distribution of any
transcription of this call.

Safe Harbor Compliance Statement for Forward-Looking Statements

This press release contains certain statements that are forward-looking
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are difficult
to predict. Actual outcomes and results may differ materially from those
expressed in, or implied by, our forward-looking statements. Words such
as "expects," "intends," "anticipates," "believes," "estimates,"
"guides," "provides guidance," "provides outlook" and other similar
expressions or future or conditional verbs such as "will," "should,"
"would" and "could" are intended to identify such forward-looking
statements. Readers of this press release by The Western Union Company
(the "Company," "Western Union," "we," "our" or "us") should not rely
solely on the forward-looking statements and should consider all
uncertainties and risks discussed in the "Risk Factors" section and
throughout the Annual Report on Form 10-K for the year ended
December 31, 2012. The statements are only as of the date they are made,
and the Company undertakes no obligation to update any forward-looking
statement.

Possible events or factors that could cause results or performance to
differ materially from those expressed in our forward-looking statements
include the following: (i) events related to our business and industry,
such as: deterioration in consumers' and clients' confidence in our
business, or in money transfer and payment service providers generally;
changes in general economic conditions and economic conditions in the
regions and industries in which we operate, including global economic
and trade downturns and financial market disruptions; political
conditions and related actions in the United States and abroad which may
adversely affect our business and economic conditions as a whole;
failure to compete effectively in the money transfer and payment service
industry with respect to global and niche or corridor money transfer
providers, banks and other money transfer and payment service providers,
including telecommunications providers, card associations, card-based
payment providers and electronic and Internet providers; the pricing of
our services and any pricing reductions, and their impact on our
consumers and our financial results; our ability to adapt technology in
response to changing industry and consumer needs or trends; our failure
to develop and introduce new services and enhancements, and gain market
acceptance of such services; changes in, and failure to manage
effectively, exposure to foreign exchange rates, including the impact of
the regulation of foreign exchange spreads on money transfers and
payment transactions; interruptions of United States government
relations with countries in which we have or are implementing
significant business relationships with agents or clients; changes in
immigration laws, interruptions in immigration patterns and other
factors related to migrants; mergers, acquisitions and integration of
acquired businesses and technologies into our Company, including
Travelex Global Business Payments, and the realization of anticipated
financial benefits from these acquisitions, and events requiring us to
write down our goodwill; decisions to change our business mix; failure
to manage credit and fraud risks presented by our agents, clients and
consumers or non-performance by our banks, lenders, other financial
services providers or insurers; adverse movements and volatility in
capital markets and other events which affect our liquidity, the
liquidity of our agents or clients, or the value of, or our ability to
recover our investments or amounts payable to us; any material breach of
security or safeguards of or interruptions in any of our systems; our
ability to attract and retain qualified key employees and to manage our
workforce successfully; our ability to maintain our agent network and
business relationships under terms consistent with or more advantageous
to us than those currently in place; adverse rating actions by credit
rating agencies; our ability to realize the anticipated benefits from
productivity and cost-savings and other related initiatives, which may
include decisions to downsize or to transition operating activities from
one location to another, and to minimize any disruptions in our
workforce that may result from those initiatives; our ability to protect
our brands and our other intellectual property rights; our failure to
manage the potential both for patent protection and patent liability in
the context of a rapidly developing legal framework for intellectual
property protection; changes in tax laws and unfavorable resolution of
tax contingencies; cessation of or defects in various services provided
to us by third-party vendors; material changes in the market value or
liquidity of securities that we hold; restrictions imposed by our debt
obligations; significantly slower growth or declines in the money
transfer, payment service, and other markets in which we operate; and
changes in industry standards affecting our business; (ii) events
related to our regulatory and litigation environment, such as: the
failure by us, our agents or their subagents to comply with laws and
regulations, including regulatory or judicial interpretations thereof,
designed to detect and prevent money laundering, terrorist financing,
fraud and other illicit activity, and increased costs or loss of
business associated with compliance with those laws and regulations;
changes in United States or foreign laws, rules and regulations
including the Internal Revenue Code, governmental or judicial
interpretations thereof and industry practices and standards, including
the impact of the Foreign Account Tax Compliance provisions of the
Hiring Incentives to Restore Employment Act; liabilities resulting from
a failure of our agents or their subagents to comply with laws and
regulations; increased costs or loss of business due to regulatory
initiatives and changes in laws, regulations and industry practices and
standards affecting us, our agents, or their subagents; liabilities and
unanticipated developments resulting from governmental investigations
and consent agreements with, or enforcement actions by, regulators,
including those associated with compliance with, failure to comply with,
or extension of, the settlement agreement with the State of Arizona; the
impact on our business from the Dodd-Frank Wall Street Reform and
Consumer Protection Act, the rules promulgated there-under, and the
actions of the Consumer Financial Protection Bureau; liabilities
resulting from litigation, including class-action lawsuits and similar
matters, including costs, expenses, settlements and judgments; failure
to comply with regulations regarding consumer privacy and data use and
security; effects of unclaimed property laws; failure to maintain
sufficient amounts or types of regulatory capital to meet the changing
requirements of our regulators worldwide; and changes in accounting
standards, rules and interpretations; and (iii) other events, such as:
adverse tax consequences from our spin-off from First Data Corporation;
catastrophic events; and management's ability to identify and manage
these and other risks.

About Western Union

The Western Union Company
WU, +6.41%
is a leader in global payment
services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western
Union Business Solutions branded payment services, Western Union
provides consumers and businesses with fast, reliable and convenient
ways to send and receive money around the world, to send payments and to
purchase money orders. As of June 30, 2013, the Western Union, Vigo and
Orlandi Valuta branded services were offered through a combined network
of approximately 520,000 agent locations in 200 countries and
territories and approximately 115,000 ATMs. In 2012, The Western Union
Company completed 231 million consumer-to-consumer transactions
worldwide, moving $79 billion of principal between consumers, and 432
million business payments. For more information, visit www.westernunion.com.

* See page 13 of the press release for the applicable Note
references and the reconciliation of non-GAAP financial measures.
** Calculation of growth percentage is not meaningful due to the
impact of the TGBP acquisition in November 2011.

__________
(a) The Company made tax payments of approximately $100 million through
the second quarter of 2012 due to the December 2011 agreement with
the United States Internal Revenue Service ("IRS") resolving
substantially all of the issues related to the restructuring of our
international operations in 2003 ("IRS Agreement").

__________
(a) Business Solutions operating loss includes TGBP integration expense
of $6.2 million and $10.1 million for the three and six months ended
June 30, 2013, respectively and $14.5 million and $20.9 million for
the three and six months ended June 30, 2012, respectively.
(b) Calculation not meaningful.

Non-GAAP related notes:
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(h) Represents the impact from the fluctuation in exchange rates between
all foreign currency denominated amounts and the United States
dollar. Constant currency results exclude any benefit or loss caused
by foreign exchange fluctuations between foreign currencies and the
United States dollar, net of foreign currency hedges, which would
not have occurred if there had been a constant exchange rate.
(i) Represents the pro forma incremental impact of Travelex Global
Business Payments ("TGBP") on Consolidated and Business Solutions
segment revenues. Pro forma revenues presents the results of
operations of the Company and its Business Solutions segment as they
may have appeared had the acquisition of TGBP occurred as of January
1, 2011. The pro forma information is provided for illustrative
purposes only and does not purport to present what the actual
results of operations would have been had the acquisition actually
occurred on the date indicated. The results of operations for TGBP
have been included in Consolidated and Business Solutions segment
revenues from November 7, 2011, the date of acquisition.
(j) Earnings before Interest, Taxes, Depreciation and Amortization
(EBITDA) results from taking operating income and adjusting for
depreciation and amortization expenses.
(k) Represents the remaining tax payments of approximately $100 million
the Company expects to make due to the December 2011 agreement with
the IRS resolving substantially all of the issues related to the
restructuring of our international operations in 2003.
Other notes:
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(l) Geographic split is determined based upon the region where the money
transfer is initiated and the region where the money transfer is
paid. For transactions originated and paid in different regions, the
Company splits the transaction count and revenue between the two
regions, with each region receiving 50%. For money transfers
initiated and paid in the same region, 100% of the revenue and
transactions are attributed to that region. For money transfers
initiated through the Company's websites ("westernunion.com"), 100%
of the revenue and transactions are attributed to that business.
(m) Represents the Europe and the Commonwealth of Independent States
("CIS") region of our Consumer-to-Consumer segment.
(n) Represents the North America region of our Consumer-to-Consumer
segment, including the United States, Mexico, and Canada.
(o) Represents the Middle East and Africa region of our
Consumer-to-Consumer segment.
(p) Represents the Asia Pacific ("APAC") region of our
Consumer-to-Consumer segment, including India, China, and South Asia.
(q) Represents the Latin America and the Caribbean ("LACA") region of
our Consumer-to-Consumer segment.
(r) Represents transactions initiated on westernunion.com which are
primarily paid out at Western Union agent locations in the
respective regions.
(s) Represents transactions between and within foreign countries
(including Canada and Mexico). Excludes all transactions originated
in the United States.
(t) Represents transactions originated in the United States, including
intra-country transactions.
(u) Represents revenue generated from electronic channels, which include
westernunion.com, account based money transfer and mobile money
transfer (included in the various segments).
(v) TGBP integration expense consists of severance and other benefits,
retention, direct and incremental expense consisting of facility
relocation, consolidation and closures; IT systems integration;
amortization of a transitional trademark license; and other expenses
such as training, travel and professional fees. Integration expense
does not include costs related to the completion of the TGBP
acquisition.
(w) Represents revenue from prepaid services. This revenue is included
within Other.

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